Yellowknife (May 03/06) - Mayor Gord Van Tighem says the city probably won't raise taxes to re-coup money owing from Miramar Con Mine, even though the mining company has left a $300,000-plus hole in the city's budget.

Mayor Gord Van Tighem says the city may sue if Miramar Con Mine doesn't pay its property taxes. - Mike W. Bryant/NNSL photo

On Monday, city council was told that Miramar owes the city $333,731 in outstanding property taxes and penalties for 2005, plus $139,142 in school levies to Yk Education District No.1 and Yellowknife Catholic Schools. Miramar's property taxes for 2006 are due this summer. If the company fails to pay then, the total bill will come to $581,074, plus $242,144 in school levies.

According to a memorandum to council's priorities, policies and budget committee, the money owing accounts for a 1.47 per cent shortfall in property tax revenue slated for the city's 2006 budget. Miramar closed Con Mine in 2003. The company is currently in the process of cleaning the site up.

Council was warned that a tax increase is something it will have to consider when mill rates are set later this month.

City council approved a 2.47 per cent increase in property taxes for 2006 last December. If the Miramar shortfall were to be factored in, it would mean an approximate four per cent increase this year.

But Van Tighem said the memo to council was a mistake. Capital projects may be on the hook, but not necessarily the ratepayers, he said.

"It doesn't need to result in a property tax increase," said Van Tighem.

"With the previous experience with Giant Mine we revised the budgeting procedures in 2000.

"With the indication that the mines were winding down, we also allocated any tax funds coming from the mines into capital works."

In 1999, City Hall faced a near revolt from ratepayers angered by a proposed six per cent property tax increase. Council deemed the increase necessary after Giant Mine went bankrupt, leaving ratepayers on the hook for $500,000 in property taxes owed by the mine's former owners, Royal Oak.

City council later decided that any property tax revenue coming from either Con or Giant Mine should be kept out of the general revenue stream to avoid unforeseen budget shortfalls for programs and services.

Capital projects slated for this year, however - including paving roads, fixing sewers and building recreational facilities - could be cut if Miramar doesn't pay up, said Van Tighem.

The mayor said the most likely recourse for the city if Miramar doesn't pay is to sue.

Normally, the city will try to claim overdue property taxes with the threat of seizing property and auctioning it off, but that's problematic in Miramar's case, because the property is leased from the territorial government.

Another option handed to council Monday was to negotiate the purchase of Miramar lands from the territorial government in lieu of debts owed. The city has expressed interest in some lands around Con Mine, but so have the Akaitcho Dene, who are still negotiating a land claim.

Coun. Doug Witty said it's a shame "a good corporate citizen" like Miramar won't pay its taxes, but "at the end of the day, they need to pay."

"I don't know whether it's their frustration with the way their reclamation activities are being treated, but the city still needs to get paid," said Witty.

Yk Education District No. 1 superintendent Metro Huculak, meanwhile, said having the $80,000 owed by Miramar from last year would be nice, but the shortfall won't hurt the district's budget.

"Our budget is fairly good," said Huculak. "We're in a good position."

Miramar isn't the only mining company behind on property taxes. Dave Devana, the city's director of corporate services, said about $100,000 is still owed from Giant Mine.

He said the territorial and federal governments are still deciding who should pay the bill. They took over the property after Miramar ceased operations there two years ago.

Bill Mitchell, Giant Mine clean-up manager for Indian Affairs and Northern Development, said the government doesn't pay taxes directly, but could make payments "in lieu of taxes."

Miramar declined to comment.